By Retail of the future: 5 trends to watch
Rising prices, supply chain disruptions, high employee turnover, and rapidly changing consumer behavior. Retailers are facing various challenges that force them to undergo a swift transformation.
When loyalty is no longer a given, retailers must adjust their business models and shift toward models that best meet the desires and needs of the modern customer. The good news? There are plenty of opportunities for sellers willing to change! In this blog article, we will discuss 5 emerging trends and technologies that present new challenges and opportunities.
Trend 1: The transformation of physical stores
The role of the retailer has significantly evolved in recent years due to a persistent customer preference for online shopping. As a result, retailers are increasingly seeking new ways to provide engaging and personalized shopping experiences that enhance the customer journey and foster customer loyalty. Consider, for example, Patagonia’s repair services, Levi’s trade-in program, and concept stores like Dick’s House of Sport, where you can try out equipment directly on a climbing wall.
Achieving success in today’s retail market also means thinking about services beyond the boundaries of traditional retail. This includes live product demonstrations, consultations, rentals, courses, and sustainability initiatives. Additionally, retailers are increasingly investing in digital options that create fast and easy shopping experiences. Examples include:
- Endless virtual aisles that allow retailers to expand their in-store offerings with their online catalog. The sustainable fashion store Reformation, for instance, uses digital screens where customers can view the entire brand inventory, see product details, and add items to their fitting rooms.
- Mobile apps that customers use in-store. The British cosmetics retailer Lush, for example, offers a lens feature on its mobile app that allows customers to scan products and see what they do.
- Interactive displays that create immersive in-store experiences. Adidas, for instance, uses multisensory stations in several stores that enable advanced experiences like virtual avatars and lotteries.
Trend 2: Engaging Generation Z
Generation Z currently represents about 40 percent of the global retail market. Therefore, retailers need to have or develop a strategy to engage this group. There are various ways to do this.
Flexible payment methods
As a generation that has grown up with the principle of digital-first, members of Generation Z have high expectations for payment experiences. They primarily seek speed and a variety of options. Examples include: Buy Now, Pay Later (BNPL), which allows payments to be split into smaller, more manageable installments over weeks or months; peer-to-peer payment options that make it easy to send secure payments in just a few steps (and via mobile); and mobile wallets for seamless and contactless payment options.
Social Commerce
Shopping on social media platforms like TikTok or Instagram, known as social commerce, is a popular trend that is still evolving. The immediacy of social commerce has already transformed retail and is leading to more experimentation. According to research from HubSpot, 22% of consumers prefer discovering new products via social media. Unlocking social commerce can be achieved by targeting social media users based on their displayed preferences and by giving younger consumers the opportunity to choose their preferred payment option(s).
Trend 3: Technology that supports employee retention
Retaining talent has been a longstanding issue for retailers. A recent study by Forrester, for example, found that 63 percent of retailers face a shortage of front-line staff. This means that retailers would be wise to leverage technology that allows employees to work more efficiently and provides them with access to all the resources they need to perform effectively.
Consider the following:
- Optimizing Training Periods by using technology that is easy to learn.
- Expanding Employees’ Digital Skills.
- Assisting Workers on the Shop Floor with mobile points of sale (POS) and self-checkout technologies. With POS devices, any mobile phone or tablet becomes a point of sale (ideal for customers who don’t want to stand in line at the register), while self-scanners reduce the pressure on cashiers.
- Identifying Key Issues and Bottlenecks that employees face within your company and then looking for ways to reduce their workload. This may mean partially abandoning existing business models for a new approach. Additionally, provide both new and experienced employees the opportunity to gradually develop and adapt to the changing retail landscape.
Trend 4: Sustainable and ethically responsible business practices
Sustainability is more than just a buzzword; it is one of the most dynamic and significant trends in retail today. Consumers increasingly prefer brands that take clear initiatives in sustainability and provide transparency about the sourcing of their products. Research by PwC shows that more than 70% of consumers are willing to pay higher prices for food sourced from local farms or ethical companies.
At the same time, cost awareness remains a factor that can sometimes pose a barrier to sustainability. The interest in sustainability, coupled with financial considerations, has also led to the growth of the second-hand market. A focus on high-quality items (many modern consumers prioritize better products over merely acquiring more goods), entering the second-hand market, and positioning yourself as a responsibly operating company will help you engage in sustainable and ethical business practices.
Trend 5: Technology that reduces costs and risks
As the risk of cyberattacks and online threats continues to rise, business continuity has become a central focus for retailers. Retailers therefore need technologies that enhance productivity, ensure speed, provide clear business insights, mitigate risks, and offer sufficient flexibility for adaptation and innovation.
SaaS retail systems can help you achieve these goals. You always have access to the latest software versions, can rely on a robust security ecosystem that keeps your business data and customer information safe, and have cloud-based access to essential apps and information anytime, anywhere. By using the same software and an integrated retail platform like LS Central to manage both online and physical stores, you also maintain a clear inventory overview across all channels.